401(k) Assets in Stable Value Reach Historical High

By the end of the November, the allocation of 401(k) assets to stable value was at a historical high as 401(k) participants continued to transfer out of equities and into fixed-income investments, according to Hewitt.

The Index for November shows stable value funds gained $342 million from participant transfers, and by the end of the month, the allocation to stable value was 33.4%, up from 20.5% just one year ago. Balanced and money market funds also received $61 million and $12 million in inflows, respectively, Hewitt said.

Outflows mainly came from large U.S. equity, lifestyle, company stock, and international funds. Large U.S. equity lost $86 million in outflows during the month. Over the past three months, a total of $528 million has moved out of this asset class, Hewitt data shows. Lifestyle funds experienced $86 million in outflows in November, with a total of $484 million shifted out of this asset class during the past three months.

Participant-only contributions also saw a shift as large U.S. equity, which usually garners the highest percentage of participant contributions, won 17.19%, behind GIC/stable value (23.13%) and lifestyle/pre-mix funds (20.42%).

On average, 401(k) participants transferred 0.06% of balances on a net daily basis in November (slightly above the trailing average of the past 12 months), according to Hewitt. The direction of transfers was fixed income-oriented on 58% of the days in the month.

The level of transfers was above normal four days of the month, with moneys moving toward fixed-income investments on all four days, each of which was immediately following large declines in the stock market.